Australia has long been an international leader on financial transparency issues, whether we’re talking about taxes, beneficial ownership academic research, or money laundering laws. They aren’t perfect, but it looks like the Australian Parliament will support an important new provision to make their tax system a whole lot more transparent:

Global giants including Apple and Google will be forced to reveal how much tax they pay the federal government, under a plan to name and shame firms seen to be dodging their responsibilities by using tax havens.

The proposed crackdown, announced today, would also clear the way for the government to publish more detail on how much mining tax resources firms are paying. Until now, the government has refused to say exactly how much money the mining tax has raised, citing the need for taxpayer confidentiality.

A fundamental principle of tax law is that the affairs of all taxpayers, from individuals to corporate giants, are kept secret.

But with governments around the world seeking to protect their budgets against use of tax havens, especially by technology firms, large companies operating in Australia may no longer enjoy such privacy.

Federal Labor hopes to pass legislation before the September election that would require large firms to publish more detailed information on how much tax they pay.

The controversy arose when Google, which operates in Australia, paid a reported $74,176 in 2011, and Apple fell into similar trouble. The move itself won’t capture any tax revenue directly for Australia, but will make it difficult for companies to hide behind walls of secrecy when using abusive transfer pricing schemes to shift profit out of countries where it is earned. Even in Australia, Google is somehow claiming that it actually paid a lot more than $74,176 in taxes, although its difficult to imagine how this can be a fact in dispute. The system needs a heavy dose of transparency. 

The rest of the world should follow Australia’s lead, and implement country-by-country reporting, which the Task Force advocates for. That means that companies like Google not only have to report how much tax they paid in every country in the world, but also data like their number of employees, revenue, costs, and other information in each country. That way, we won’t have to rely on isolated data points like one example in Australia, and we could know instantly where all of these multinational corporations are reporting their earnings.

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This entry was posted on Monday, February 4th, 2013 at 3:32 pm and is filed under Blog. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.